WASHINGTON (Reuters) – Top Internal Revenue Service officials told Congress on Tuesday they were unaware of the agency’s targeting of conservative groups for extra tax scrutiny until recently and were not deliberately misleading lawmakers last year when they did not reveal the practice.

Exasperated senators questioned the truthfulness of former IRS Commissioner Douglas Shulman, who led the agency from 2008 to 2012, and outgoing acting IRS chief Steven Miller. Republican Senator Orrin Hatch of Utah accused IRS leaders of a “lie by omission.”

At a Senate Finance Committee hearing, Shulman said he was “dismayed” when he read an inspector general’s report last week laying out evidence that IRS workers in Cincinnati, Ohio, had inappropriately focused on groups with the words “Tea Party” and “patriots” in their names.

Senators asked why Shulman did not reveal the practice, which started in March or April of 2010, during congressional testimony in late March 2012. At the time, he rejected conservatives’ complaints that the IRS was targeting groups for extra scrutiny.

“The full set of facts around these circumstances came out last week … until that point I did not have a full set of facts,” Shulman said on Tuesday.

“What I knew sometime in the spring of 2012 was that there was a list that was being used. I knew that the word “Tea Party” was on the list. I didn’t know what other words were on the list,” he said.

A Treasury Department watchdog has said he informed Shulman about an investigation into the matter in May 2012, but assumed IRS officials would have told Shulman about potential targeting problems before that.

Lawmakers said they were disappointed in the answers, but Miller and Shulman denied they had hidden the truth from Congress. “I did not lie, sir,” Miller told Hatch.
Miller was forced to resign last week and more senior agency officials could be on the firing line in the broadening scandal, as members of both parties have rushed to condemn the IRS for overstepping its authority.

The rising political storm has undercut President Barack Obama’s second-term agenda and put the White House on the defensive as he tries to negotiate a budget deal with Republicans and push a comprehensive immigration reform bill through Congress.

SCANDAL QUESTIONS

The hearing in the Democrat-controlled Senate Finance Committee featured a push for more details about who ordered the extra tax scrutiny for conservative groups.

It also focused on what top officials knew about the practice, and when.

Those questions gained more urgency on Monday when the White House revealed that two senior aides to Obama knew weeks ago about a draft Treasury Department watchdog report detailing the IRS targeting that occurred for an 18-month period starting in early 2010.
White House spokesman Jay Carney said White House Counsel Kathryn Ruemmler was notified on April 24 of the report’s preliminary findings, and that she told Chief of Staff Denis McDonough and other senior staffers soon afterward.

Ruemmler chose not to inform Obama about the findings to avoid any appearance that he had any role in shaping the report, Carney said.

Obama has said did not learn of the targeting until May 10, when IRS official Lois Lerner apologized for the agency’s actions while responding to a planted question at an American Bar Association conference. Obama fired Miller after the inspector general’s report was released on May 14.

Miller on Tuesday took responsibility for the planted question at the event, calling it “an incredibly bad idea.” He said there were ongoing discussions about discipline for Lerner, chief of the IRS tax-exempt unit.

The White House’s handling of the scandal has been a story line within the scandal and raised questions about the ability of Obama’s team to handle the crisis. The IRS scandal comes as the White House faces scrutiny over the deadly attack on the U.S. mission in Benghazi, Libya, last September and the Justice Department’s tracking of reporters while investigating national security leaks.

Late Monday, Treasury also acknowledged that it knew that the IRS planned to apologize for agents’ behavior before the inspector general’s report, but that Treasury officials left the decision for how to do that with the IRS.

The leaders of the Senate Finance Committee – Democratic Chairman Max Baucus of Montana and Hatch of Utah – sent the IRS a letter on Monday seeking a broad range of documents and asking more than 40 questions covering three years of IRS activity.